Question:
Find the amount to be paid if James borrowed a sum of $5000 at 8% simple interest for 7 years.
Correct Answer
$7800
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 8%
Time (t) = 7 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 8% simple interest means, Rate of Simple Interest (SI) is 8% per annum.
Method (1) Using Formula
Calculation of Simple Interest
Formula to Calculate Simple Interest
Simple Interest (SI) = Principal × Rate × Time
Thus, Simple Interest (SI) = $5000 × 8% × 7
= $5000 ×8/100 × 7
= 5000 × 8 × 7/100
= 40000 × 7/100
= 280000/100
= $2800
Thus, Simple Interest = $2800
Calculation of Amount
The total money paid to the lender by a borrower is called the Amount.
In other words, sum of priciple and interest is called the Amount.
Formula to Calculate the Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $2800
= $7800
Thus, Amount to be paid = $7800 Answer
Method (2)
Calculation of Amount when Principal, Rate of Simple Interest and Time are given
Calculation of Amount directly using Principal, SI, and Time
Formula to calculate the Amount
Amount (A) = Principal (P) + Principal(P) × Rate of Interest (SI) × Time (t)
⇒ A = P + PRT
Here in the question, P = $5000
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 7 years
Thus, Amount (A)
= $5000 + ($5000 × 8% × 7)
= $5000 + ($5000 ×8/100 × 7)
= $5000 + (5000 × 8 × 7/100)
= $5000 + (40000 × 7/100)
= $5000 + (280000/100)
= $5000 + $2800 = $7800
Thus, Amount (A) to be paid = $7800 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 8%
This, means, $8 per $100 per year
∵ For $100, the simple interest for 1 year = $8
∴ For $1, the simple interest for 1 year = 8/100
∴ For $5000, the simple interest in 1 year
= 8/100 × 5000
= 8 × 5000/100
= 40000/100 = $400
Thus, simple interest for 1 year = $400
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $400 × 7 = $2800
Thus, Simple Interest (SI) = $2800
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $2800
= $7800
Thus, Amount to be paid = $7800 Answer
Similar Questions
(1) Calculate the amount due if Joseph borrowed a sum of $3700 at 3% simple interest for 4 years.
(2) Calculate the amount due if Jessica borrowed a sum of $3750 at 3% simple interest for 4 years.
(3) Calculate the amount due if Robert borrowed a sum of $3100 at 4% simple interest for 3 years.
(4) How much loan did Steven borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7590 to clear it?
(5) What amount will be due after 2 years if Matthew borrowed a sum of $3600 at a 6% simple interest?
(6) How much loan did Melissa borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $8820 to clear it?
(7) Calculate the amount due if Karen borrowed a sum of $3950 at 8% simple interest for 4 years.
(8) How much loan did William borrow 5 years ago at a rate of simple interest 4% per annum, if he paid $6600 to clear it?
(9) What amount does Karen have to pay after 5 years if he takes a loan of $3950 at 8% simple interest?
(10) Calculate the amount due if Thomas borrowed a sum of $3800 at 3% simple interest for 4 years.